Empty and boarded-up shops on side roads could be converted into residential property as part of efforts to rejuvenate the UK's ailing high streets.

The latest review of the Portas Pilots – a scheme led by retail guru and '"Queen of Shops" Mary Portas, to revive struggling retail centres – says there will be a consultation over the next six months on further relaxing planning regulations, to allow the conversion of retail space on minor thoroughfares running off high streets into residential property.

Eighteen months ago, Portas completed her review into the future of the nation's high streets, aiming to tackle soaring shop vacancy rates and boost the number of small and independent retailers in town centres.

The prime minister then asked the Department for Communities and Local Government to lead the response to her recommendations, including setting up 27 Portas Pilots.

The new report is exploring ways for businesses to find new premises more quickly, urging landlords to be more flexible in accommodating businesses and offering shorter leases, with the potential to increase housing on the high street.

The report said: "Together these reforms provide a substantial opportunity to bring more life into town centres and increase footfall."

The government has also launched the Future High Streets Forum to build on the learning and experiences from the pilots. The Forum brings together leaders from retail, property, business, academics, third sector, civil society and government to better understand the competition town centres across the country face and to drive forward new ideas and policies to help the high street compete and adapt.

It was also revealed that the Portas scheme to revitalise ailing high streets has failed to stop the rot – with 10 out of the 12 towns so far selected to share £1.2m of taxpayers' cash seeing an increase in empty shopping outlets. The towns – Bedford, Croydon, Dartford, Liskeard, Market Rasen, Nelson, Newbiggin-by-the-Sea, Stockport, Stockton-on-Tees and Wolverhampton – together saw more than 95 units close.

A DCLG spokeswoman said that conversions of shops into residential property – leading to more residents – could rejuvenate the high street. The report also says the government will continue to explore further ways of making the most of flats above shops.

Local growth minister Mark Prisk added: "Today's report sets out the wide range of measures we've taken to help communities breathe new life into their town centres. Since coming into government, we've lifted planning restrictions to bring empty properties back into use, cut business rates for thousands of small businesses and scrapped the unfair rules around parking charges."

The homeless charity Shelter – which has a campaign for affordable homes – welcomed the move but stressed that any new accommodation should be a carefully planned, permanent solution, rather than a "sticking plaster" device to make use of redundant retail space.